A little essay I just wrote
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The decline of Spanish empire in the seventeenth and eighteenth centuries is an important case study for the decline of world powers. The Spanish empire was initially grown via world trade and the exportation of it wealth from the Americas. Spain would face serious economic problems, such as a bankrupt state, which lead to dreadful taxation (doc 2), also the lack of new imported wealth (doc 1). There was also a certain philosophy of extravagance that further pushed Spain into economic turmoil (doc 6). Finally the rise of England as an economic sea power, (doc 12) and rebellions on basic goods, (doc 13) finally made Spain's investments in the Americas crumpled, and with it, its empire.
In the fourteenth and fifteenth centuries, Spain had gained vast amounts of wealth due to overseas slave trading (doc 9) and, gold and silver. However, the Spanish spent most of this extra income on King Phillip spent on wars. As a result of these wars Spain was in terrible debt, a debt which interest was continually rising (doc 3). To pay off this debt the King had to raise taxes, these taxes were so heavy that it drove many of the Spanish into poverty and even out of the nation, further damaging Spain's economy. The actions of the Spanish themselves, though, are what finally turned over the economy.
The Spanish middle classes as of the 1600s, which survived the heavy taxation, spent their money frivolously to copy the tastes of the wealthy aristocracy (doc. 4). As a result, Spain became an import country, which exported its raw gold and silver deposits that it received from the Americas (doc 1). The wealthy even encouraged this behavior, as they though it would give Spain more prestige. Countries such as France, England, the Netherlands and Italy greatly gained from this export of capital (doc. 6). This grandiose spending of Spain would in time increase England's economy and lead it to become the leading world ocean power, rivaling Spain.
The rise in England would eventually lead to the demise in Spain. By the mid 1600s Spanish merchants began to disobey there own countries taxation and shipped directly to English and Dutch ports (doc 5). By the 1700s the English were fishing, making colonies, and trading in the Americas free of Spanish intervention (doc 12). With this new found English power, which was its naval supremacy, which rivaled the combined forces of France and Spain (doc. 7)? England then made a sweeping victory in the 7 years war. England claimed several Spanish colonies in the Americas, India, and Africa, and most importantly Gibraltar, crippling Spain's Mediterranean trade as well as a morale in directly conquering the Spanish mainland (doc. 8). By the 1760s England had almost a complete monopoly on trade in the American colonies, and was the world's naval power (doc 11). By the 1760s, though, Spain's economy had crashed and people began revolting for better prices on wheat, oil, and beans (doc 13). After the Napoleonic age in the 1820s, Spain lost its last colonies in the Americas and was no longer an Empire.
The fall of Spain is a classic tale of boom and bust for an Empire. Spain used its new found power for extravagance and wars, bankrupting the nation and putting crushing taxes on the people. Meanwhile the spending of Spain helped give rise to England, which eventually stripped its main economic supply, made the empire crumble. Spain's folly is important to remember as many nations follow the same economic pitfalls. Some may even point out that the Spain-England decline and fall relationship mirrors the United States and China. Like England to Spain, China takes America's capital, while America actually makes few things itself. Also American puts itself into bankruptcy with its own extravagance and military expenditure. The fall of Spain in such a manner should be an example to America.